Will USDA Find Higher Corn Yields, Stocks? Maybe

Two outcomes are possible from Monday’s USDA grain and stocks report, says Jerry Gulke, president, The Gulke Group. The outcome will guide what happens to the corn market and, perhaps more obviously, the wheat market.

"If corn stocks come in lower than they thought and use 50 million bushels more, perhaps, who cares? We’re combining corn, we’re in the new crop. It just says yeah, well, we ended the year 50 million less, insignificant compared to a 14-billion-bushel crop we’re growing."

Conversely, if stocks come in higher—say by 50 million bushels—the bullish ride that wheat has been experiencing might continue.

"I think what we’ll find Monday is that we used more wheat or that we didn’t grow as much wheat as we thought, and we’ll probably see protections of the carryover at the low end of estimates," Gulke says. "We’ll see if it’s further bullish in wheat or not, but wheat has a tendency to go crazy when it goes. When it goes up, it goes up and doesn’t leave any prisoners, and it’s been on a whole-year downturn since last September.

"It really dropped from $9 down to $6.55 or $6.45. If we closed where we did today, we would say that we closed the highest close we have seen in the December wheat since July."